Correos to Set Up Real Estate Division to Generate Cash from Property Holdings

11 December 2019 – Spain’s Correos (post office) is looking to set up a real estate division to lease or sell many of the properties it owns in the most central areas of the country’s provincial capitals. So far, the firm has only reported income of two million euros on the properties. The new plan is a part of Juan Manuel Serrano’s new strategic plan for Correos. Serrano, the president of the firm, wants to generate more cash using the company’s real estate portfolio.  

Original Story: Idealista

Adaptation/Translation: Richard D. K. Turner

El Corte Inglés Puts a RE Portfolio Worth Between €1.5bn & €2bn Up For Sale

21 December 2018 – Expansión

El Corte Inglés is preparing to shatter the real estate market. The distribution giant has engaged PwC to sell a mega-portfolio containing 130 properties with a valuation of between €1.5 billion and €2 billion, which would represent the largest divestment undertaken by the company to date.

The operation includes a large variety of assets, all of which are non-strategic, and includes shopping centres (not large department stores), logistics warehouses, supermarkets, offices and land. Once the period for receiving offers has closed and depending on the offers themselves, El Corte Inglés will reserve the right to reduce the size of the portfolio. According to market sources, the firm’s intention is not to find a single buyer but rather to slice up the assets into packages.

Real estate portfolio

The company chaired by Jesús Nuño de la Rosa is whereby accelerating the divestment plan launched to reduce debt with a view to obtaining an investment grade rating from the ratings agencies over the medium term.

El Corte Inglés is one of the main owners of real estate assets in Spain, with a portfolio worth more than €17 billion, larger even than those owned by the large Spanish Socimis, Merlin and Colonial, whose asset portfolios were worth €12.2 billion and €11.2 billion, respectively, as at June, and those of the large real estate companies such as Amancio Ortega’s Pontegadea, whose assets were worth €8.8 billion at the end of 2017.

With this large exposure to property, El Corte Inglés is taking advantage of the investor appetite in the market for real estate assets to clean up its balance sheet. Last year, real estate investment reached a new record with transactions worth €18.7 billion, including corporate operations, which represented an increase of 46%. Excluding purchases by companies, the investment figure also reached a historical maximum of €10.8 billion, according to data from CBRE.

In the framework of this plan, this summer, the company sold its centres in Parquesur and La Vaguada, both in Madrid to Unibail Rodamco, the largest operator of shopping centres in Europe. Those assets have a surface area of 20,000 m2 each and were sold for €160 million.

Original story: Expansión (by R. Arroyo & V. Osorio)

Translation: Carmel Drake

BBVA Reduces the Property Portfolio that it will Transfer to Cerberus by 12%

17 May 2018 – Expansión

BBVA is not holding back in its strategy to reduce its exposure to the real estate sector ahead of putting the finishing touches to its agreement with Cerberus. The entity has already cleaned up some of the portfolio that it will transfer to the US fund in September.

Between the reference date for the operation – the end of June 2017, and March this year, the date of the most recent audited accounts -, the bank has decreased its foreclosed assets by 12% – those assets proceed from unpaid residential and property developer mortgages.

The bank is going to create a joint venture with the US fund to reduce its real estate exposure in Spain to almost zero. BBVA will sell 80% of that joint venture to Cerberus for an estimated price of €4 billion. But that amount may vary, depending on the volume of foreclosed assets that end up being transferred.

Initially, a portfolio with a gross asset value of around €13 billion was defined. By March, the entity’s foreclosed assets balance had decreased to a gross value of €11.541 billion. Most of the portfolio comprises finished buildings and land, which are easier to sell now thanks to the recovery of the real estate sector.

To cover its gross risk, BBVA has recognised provisions amounting to €7.073 billion, which reduces its net exposure to €4.468 billion. The coverage ratio of the foreclosed assets amounts to 61%.

Sources at BBVA explain that the portfolio that is going to be transferred to Cerberus also includes the ‘other real estate assets’ caption. The bank’s gross real estate exposure, including both concepts, amounted to €12.472 billion in March compared with €14.318 billion in June 2017.

Until the close of the operation, which is scheduled for September, the assets to be transferred to the joint venture will not be finalised. “Under no circumstances will transferring fewer assets result in a loss to the income statement. In fact, this operation is not expected to have a significant impact on the income statement”, explain official sources at the entity.

Solvency

The agreement with Cerberus will improve BBVA’s solvency. In March, the bank saw its core capital fully loaded ratio worsen to 10.9%. But the transfer of the real estate portfolio to the fund and the sale of its business in Chile will improve that metric to 11.5%.

BBVA has loaned Cerberus €800 million to finance part of its purchase of the real estate portfolio from the bank. The loan has a term of two years and will not accrue any interest. The fund will repay the debt in a single payment on the maturity date.

Spain’s financial institutions have stepped on the accelerator to clean up property from their balance sheets following Santander’s macro-operation to deconsolidate real estate risk amounting to around €30 billion proceeding from Popular (…).

Original story: Expansión (by R. Sampedro)

Translation: Carmel Drake

Sareb Sold Almost 5,000 Properties During Q1, Up by 12%

14 May 2018 – Eje Prime

Sareb sold almost 5,000 properties during Q1. During the first three months of the year, the bad bank placed 4,782 units, of which 2,358 corresponded to own properties and 2,424 to loan collateral properties that were transferred from the balance sheet of property developers, according to a statement issued by the company. Compared to the first quarter of 2017, that sales figure represented an increase of 12%.

88% of Sareb’s sales between January and March involved homes, whilst 7% corresponded to the sale of plots of land and the remaining 5% to the sale of commercial assets that the bad bank held relating to the tertiary market.

Similarly, the real estate company has announced the proposal to its General Shareholders’ Meeting to appoint Juan Ignacio Ruiz de Alda as a new board member, as a representative of the Restructuring Fund (Frob). The executive, with experience at Metrovacesa and Banco Santander, amongst other companies, would take over from Lucía Calvo, who left the company in January.

In 2017, Sareb ended the year with a real estate portfolio worth €37,179 million and €3,050 million of repaid debt, meaning that the company had managed to reduce its indebtedness by 25% during its first five years of life.

Original story: Eje Prime

Translation: Carmel Drake

Kingbook Injects €22M to Offset Losses & Buy New Assets

29 November 2017 – Eje Prime

Kingbook is reorienting its financial situation. The Socimi, which specialises in gas stations, has announced a capital increase amounting to €21.6 million to offset its losses, according to explanations provided by the company. The company, which is owned by GL Europe Reit, which owns a 60% stake, and JZ Real Estate, with a 40% stake, will use this capital injection to eliminate a considerable part of its current liabilities and to increase its own funds.

According to the information document prepared by Kingbook, “the purpose of this increase is to resolve the company’s equity imbalance”. This increase has been subscribed by Holdreit in its entirety, the company’s sole shareholder. On 11 July, the company decided to increase its share capital by €4.52 million, through the issue and launch into circulation of 4.52 million new shares with a nominal value of €1, through the offsetting of credits, with an issue premium that amounted to €17.1 million in total. At present, “the company is waiting for final approval from the Alternative Investment Market (MAB) before its share price reflects the increase in value resulting from the capital increase, which should happen within the next few days”, according to the group.

The report also highlights that the Socimi has incurred losses since it started operating. As at 30 September 2017, the result for the year was negative, with losses of €1.25 million. The group has seen its losses increase, given that during the same period last year, it made a loss of €767,390. “Following this move, the company’s equity position has been restored, with own funds of €23.3 million”.

Nevertheless, Kingbook has a solid portfolio of assets to continue operating for the next few years, which it has managed to increase by 21.5% over the last year, to €38.9 million. The company owns land worth €10.3 million and buildings worth €20 million, compared with €16.3 million a year ago.

Moreover, in the last year, Kingbook has added more than a dozen gas stations to its real estate portfolio. The company has acquired gas stations in León, in San Andrés de Rabanedo, for €900,000; in Cantabria, in Castro Urdiales, for €1.4 million; and in Burgos, in Miranda del Ebro, for €2.3 million, amongst others. Kingbook has spent €7.5 million on new acquisitions in total so far this year.

Moreover, the company announced in October that it is in the process of expanding its asset portfolio into other business areas besides gas stations.

Although the group explained that it has achieved high levels of efficiency in the management of its portfolio thanks to its specialisation, it has indicated that it does not want to limit its activity to a niche as specific as gas stations, given that it considers that “it has the financial potential and management resources to venture into other areas and to achieve competitive returns”.

In terms of the new business areas that Kingbook is exploring to incorporate into its portfolio, potential assets include parking lots and other infrastructure linked to the world of transport.

The Socimi currently manages 57 real estate assets where fuel distribution activities are carried out (gas stations) and also owns one hotel and one industrial warehouse (…).

Original story: Eje Prime (by C. Pareja)

Translation: Carmel Drake

VBARE Appoints Fabrizio Agrimi As New CEO

20 November 2017 -Revista Centros Comerciales

On Monday, VBARE Iberian Properties Socimi (VBARE) announced the appointment of Fabrizio Agrimi (pictured below) as the new CEO of the Socimi. Agrimi is a grand connoisseur of the real estate sector and has extensive experience in investments, mergers and acquisitions, not only in Spain but also in the United Kingdom and Italy. He has worked for a number of high profile international companies and until May 2017 he was Managing Director and Partner at Altan Capital.

Prior to joining Altan Capital in 2007, Fabrizio Agrimi formed part of the Investments Department at Aguirre Newman (2004-2006), where he participated in the acquisition, management and sale of numerous real estate assets. Prior to that, he worked in Milan and London for the law firm Vita Samory, Fabrini e Associati (now part of Orrick) where he was a member of the M&A, Private Equity and Financial Services teams.

Fabrizio Agrimi holds an MBA from the ESADE business school (Barcelona) and a degree in Law from the University of Trento. Whilst at university, Fabrizio completed two international internships at the law firm Sebastià Roca i Associats (now part of Roca Junyent) in Barcelona and at the European Parliament in Luxembourg.

With this addition, VBARE strengthens its team and consolidates its base for growth. VBARE recently presented its results for the first nine months of the year, during which time it generated a profit of €2,177,000, resulting primarily from the appreciation in value of its real estate portfolio. Revenues from rental income amounted to €781,000, which represented an increase of 188% with respect to the same period last year. The total value of VBARE’s property portfolio amounts to €28.2 million, up by 17% compared to the end of 2016.

Original story: Revista Centros Comerciales

Translation: Carmel Drake

Bain Submits Highest Bid For Liberbank’s Real Estate

10 October 2017 – Expansión

One of the main elements of the strategic plan launched by Liberbank to rebuild its financial health is entering the home stretch. The bank has now received offers from all three of the suitors who have reached the final phase of the sale of the portfolio of real estate assets worth €800 million. And, according to financial sources, the bid from the US fund Bain is the highest. But, Bain is not alone. KKR and Blackstone have also submitted binding offers, however, the cheque that the former is willing to sign is larger than those of the others, add the same sources.

Nevertheless, that does not mean that Bain is going to win Liberbank’s open bid. In the final evaluation of the offers, the perimeter that each bid defines (the portfolio primarily comprises homes, but also includes some land) will weigh as heavily as the financing that is going to be used and the tax implications. All of this could mean that the quality of the bids varies significantly, as well as the impact that one or another may have for the results of Liberbank.

In addition, market sources point out that from the date that the offers were submitted until the date exclusive negotiations begin with one of the candidates, last minute movements may arise that tip the balance one way or another.

All of this despite the fact that the calendar proposed by Liberbank does not allow for much time for the bids to be revised or for the processes to be delayed. The objective of the bank is to announce the principle of an agreement with one of the three funds that have submitted offers “imminently”, according to financial sources. And they consider that this is possible because all three of the proposals are sufficiently adequate to reach an agreement.

Capital increase

Liberbank’s intention is to announce the sale of the real estate portfolio before or during its upcoming capital increase, through which it hopes to raise €500 million from its shareholders. It plans to use the funds raised to improve the coverage levels for its non-performing assets, increasing them to almost 50% (still slightly below the average in the sector, which stands at 52%), as well as to strengthen its capital.

Liberbank’s wish is that its shareholders will participate in the capital increase safe in the knowledge that the bank has released €800 million in toxic assets, which will no longer weigh down on its balance sheet. The General Shareholders’ Meeting was due to approve the capital increase on Monday (yesterday) and the objective is that the operation will last 15 days, starting as soon as the legal processes allow.

Liberbank’s main shareholders have committed to participating in the capital increase, which means that Oceanwood, Aivilo Spain and Corporación Masaveu (owners of 12.6%, 7.4% and 5% of the share capital, respectively) will maintain their respective stakes.

The capital increase is the most important element of Liberbank’s plan to convince the markets of its financial solvency, but it is not the only one. The transfer of the real estate portfolio plays an important role, as did the sale of its real estate subsidiary, Mihabitans, to Haya Real Estate for €85 million. That company, which is owned by the fund Cerberus, has taken over the exclusive management of the foreclosed assets of Liberbank and its subsidiaries for a period of seven years.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Popular’s RE Losses €992M Higher Than Expected In 2016

2 March 2017 – Expansión

Popular had to find almost €1,000 million more than it had planned in 2016, to cover over-valued loans and properties, and the impairment of its subsidiary, Targobank.

During its last capital increase, Banco Popular announced that it was going to carry out an upwards adjustment to its provisions of around €4,700 million. Nevertheless, the final figure for the definitive provisions amounted to €5,692 million, which led to a negative result (loss) of €3,485 million. The entity, which was chaired by Ángel Ron at the time, has justified the reasons for that €992 million deviation in its total provisions balance in its recently published annual report.

The largest item in terms of provisions not foreseen in the market by the former managers of Banco Popular was “non-recurring provisions for loans and properties”. In total, around €703 million had to be found, in addition to another €54 million in extra provisions to cover other portfolios of loans and properties on the bank’s balance sheet (in this case on a recurring basis).

The other major item in terms of provisions for impairment, which worsened Popular’s numbers by more than expected, related to its subsidiary, Targobank (the bank that it controls jointly with Crédit Mutuel). The significant losses incurred by the entity in 2016 (it recorded a negative result of €71 million) and its failure to comply with the business plan caused the impairment of 100% of the entity’s goodwill balance, which had amounted to €169 million.

Finally, the bank acknowledges that it also had to add another €66 million to its provision balance in 2016 (and post 100% of the corresponding entry in the income statement for the year) in relation to “pensions, restructuring costs and other items”.

In addition to the unforeseen provision-related items, Banco Popular says in its annual report that the high level of provisions recorded in 2016 is due “to a large extent” to the clean-up procedures that were carried out as a result of the new accounting circular 4/2016, issued by the Bank of Spain, known in the sector as Annex IX, which came into force last autumn.

The majority of the clean-up effort focused on the property portfolio, as well as on loans to sectors linked to real estate. According to information presented in the entity’s accounts, this adjustment translated into an impairment in the value of the real estate assets (in other words, provisions) of around €4,025 million last year. The remaining €1,666 million of the new provisions for bad debts were allocated to cover impairments in the bank’s main business. (…).

Original story: Expansión (by Nicolás M. Sarriés)

Translation: Carmel Drake

Gas Natural Sells 4 Office Buildings In Madrid For €206M

28 December 2016 – Expansión

Gas Natural Fenosa has made cash from some of its real estate portfolio. The energy company has sold four corporate buildings in Madrid for more than €206 million, according to a statement filed with the CNMV.

Gas Natural, which will continue to occupy all of these buildings as the tenant on a rental basis, has generated net profits of around €35 million through the operation.

Specifically, the gas company has sold its headquarters in Madrid, located on Avenida de San Luis 77, to the Socimi Zambal Spain for €120 million, as Expansión reported on 24 November. It is a building with a surface area of almost 31,900 m2 and 979 parking spaces.

Similarly, Gas Natural has also closed an agreement with an institutional investor to sell three buildings located in Spain’s capital city, specifically those on Avenida de América, 38; Calle Antonio López, 193; and Calle Acanto 11-13.

The price to be paid by the buyer, whose identity has not been revealed, will amount to €86.5 million in total. The three buildings have a combined surface area of 25,100 m2 and 716 parking spaces.

Just like in the case of its Madrilenian headquarters, Gas Natural will continue to occupy these other buildings as the tenant on a rental basis.

Original story: Expansión (by J.D.)

Translation: Carmel Drake

Axiare Raises €144M In Financing To Fund New Acquisitions

23 December 2016 – Expansión

Axiare Patrimonio has closed four financing agreements, with ING, CaixaBank and BBVA, amounting to €144 million. The Socimi led by Luis López de Herrera-Oria has said that it will allocate these resources to new acquisitions and the active management of its real estate portfolio.

These loans have an average term of 7.3 years; an average total financing cost of 1.5%; and 95% of the principal will be repaid on maturity, according to the firm. Axiare also highlighted that the agreements do not stipulate any penalties in the event of early cancelation. They raise the company’s gross leverage ratio to 44%.

Since its creation in July 2014, the Socimi, which focuses on offices and logistics, has closed financing agreements amounting to €538 million.

For these operations, Axiare Patrimonio has been advised by Gómez-Acebo y Pombo.

ING Bank has been advised by Hogan Lovells; CaixaBank by Uría Menéndez; and BBVA has used its own internal legal experts.

The CEO of Axiare Patrimonio, Luis López de Herrera-Oria, has said that these financing agreements reflect “the quality of the current portfolio and the trust in our management team”. “These agreements are further proof that Axiare Patrimonio remains firmly committed to fulfilling its business plan. We are approaching the end of 2016 with a very good outlook”, said the director.

Axiare has been very active in recent months. The Socimi’s assets are worth around €1,230 million and it has invested €275 million in total during 2016.

Original story: Expansión (by R.Arroyo)

Translation: Carmel Drake